Alibaba recently announced it will invest up to US$4.5 billion into developing China’s logistics industry together with financing partners.

I called up a friend who knows Alibaba well to see what it is really about. Does it mean Alibaba will build warehouses, or it will operate a logistic company?? No, my friend said. At the moment, it only means Alibaba will setup a platform for small traders to choose between different logistics providers (e.g. UPS, Fedex, etc.) And Alibaba can take some commissions from facilitating such service.

Taobao sellers have been doing that already. Alibaba is just expanding the services to its B2B platform. You can argue this is a global expansion, as most Taobao sellers are trading domestically, while Alibaba’s B2B traders are mostly exporters targeting overseas markets.

But if there is no warehouse, no logistic company, why Alibaba needs to invest US$4.5 billion? “Well, it is just the first step of an overall plan. If everything goes well, of course, more can be done and the investment can gradually increase,” said my friend.

However, history showed a lot of Alibaba’s previous plans have not been realized. For example, Alisoft, its plan to provide inexpensive business software to SMEs in China. It basically has fail. Alisoft is a small department with less than 50 staff in its listed B2B company now.

Another example is its plan to provide bank loans to SMEs, Ali-loan. “Another failure” said another friend of mine. There are 2 parts of Ali-loan businesses. One of them is to act as a middleman between banks and SMEs. “After 4 years, the banks find out they can deal with the SMEs directly. No need for Alibaba’s involvement,” said my friend.

Another part of the business is lending Alibaba’s own money to the SMEs. “Alibaba does not have a lot of capital. How many SMEs can it lend to ??” said my friend.

In brief, be careful what you read in the press. A lot of them are plans only, with no solid commitment in execution.